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Interstate Commerce

A Wal-Mart truck on the side of the highway May 15, 2005 near Springer, New Mexico. CHRIS HONDROS/GETTY IMAGES

ices across state lines, creating a dependency on trans- four major railroads provided ground transportation. The
portation modes and making the process subject to state two railroads with independent and complete service were
laws regarding the transportation of goods. the New York Central system and the Pennsylvania sys-
tem.
RURAL ORIGINS Between 1874 and 1919, many laws were enacted
Transportation plays an important role in determining the that imposed economic regulation on the dominant
profitability of operating both farm and nonfarm busi- means of interstate commerce in the United States: the
nesses in rural areas. Farms, businesses, and industries in railroad. Federal transportation regulations, however, were
rural areas rely on transportation services to achieve nec- not of a sufficient magnitude to justify forming a cabinet-
essary production outputs and to deliver commodities and level department solely for matters of interstate com-
products to market. merce.
Interstate commerce has its roots in farming. During Economic conditions between 1874 and 1919 vacil-
most of the first decade after the Civil War (1861–1865), lated. Agricultural depression was extensive during the
farmers in seven midwestern states were responsible for 1870s and 1880s and constituted a factor that ultimately
approximately one-half of the nation’s output of corn, resulted in the economic regulation of interstate railroads
wheat, and oats. Illinois farms were the leaders in the pro- in 1887. Furthermore, an international depression
duction of each of these grains; farmers to the north pro- occurred in 1893 that sent seventy-four railroad compa-
vided large amounts of the hard varieties of wheat, while nies into financial distress. Between 1901 and 1919, U.S.
those to the south and east produced most of the corn. society experienced relative prosperity; it was during this
Based on the presence of abundant feed, these producers period that 145,000 miles of track were constructed to
established locations for fattening livestock and producing carry goods between states.
meat products. Given this state of affairs, farmers were in Executive and legislative agencies related to trans-
the market for transport services to carry livestock and portation functions proliferated between 1874 and 1919;
crops to major produce exchanges located in other states. it was during this same period that highway transporta-
Chicago and St. Louis were established as collection tion began to increase in importance. Financing and plan-
centers, but these centers were not the sites of final con- ning of highway development within state lines was
sumption. By 1870 there were well-established lines of primarily the responsibility of each individual state. Nev-
supply between states. The Great Lakes steamers and ertheless, the Bureau of Public Roads began to play a sig-
schooners provided most of the service between Chicago nificant role. In addition, the airline industry had its
and the northern portions of the Great Lakes area, and the beginnings during the early part of the twentieth century.

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 429